PLANO, Texas--(BUSINESS WIRE)--Feb. 5, 2018--
Rent-A-Center, Inc. (NASDAQ/NGS:RCII) (“Rent-A-Center” or the
“Company”), a leader in the rent-to-own industry, today announced that
it has entered into a cooperation agreement with Engaged Capital, LLC
(“Engaged Capital”). Engaged Capital beneficially owns approximately
16.9 percent of Rent-A-Center’s outstanding common stock.
Under the terms of the cooperation agreement, Rent-A-Center will
nominate for election at the 2018 Annual Meeting of Stockholders (the
“2018 Annual Meeting”) one new independent director to be proposed by
Engaged Capital. That individual will replace the nomination of Rishi
Garg, a current member of the Rent-A-Center Board, who has informed the
Company that he does not intend to stand for re-election at the 2018
Annual Meeting. Engaged Capital fully supports the Board’s diversity
objectives and intends to propose a director nominee candidate for
election at the 2018 Annual Meeting that is diverse from an ethnic
and/or gender perspective.
J.V. Lentell and Michael J. Gade, members of the Rent-A-Center Board
whose terms will expire at the 2018 Annual Meeting, have recently
informed the Company of their intent to stand for re-election. Engaged
Capital has agreed to vote in favor of Messrs. Lentell and Gade, in
addition to the new nominee. Prior to the 2018 Annual Meeting, the Board
will be composed of six directors, but may, following the 2018 Annual
Meeting, be expanded to seven directors during the remaining term of the
cooperation agreement (in which case nominees for the seventh director
seat would be proposed by Engaged Capital). Rent-A-Center has also
agreed to terminate its stockholder rights plan in advance of the 2018
Annual Meeting. In addition, if elected at the 2018 Annual Meeting,
Messrs. Lentell and Gade and the new independent director proposed by
Engaged Capital will serve on the Board together with Jeffrey J. Brown,
Mitchell E. Fadel and Christopher B. Hetrick, who were all Engaged
Capital nominees and elected at the Company’s 2017 Annual Meeting of
“We believe this consensus on Board composition for our stockholders’
consideration is an important step forward as the Board conducts its
review of strategic and financial alternatives for the Company,” said
Mitchell E. Fadel, Chief Executive Officer of Rent-A-Center. “These
activities are ongoing and robust, and we look forward to reporting to
our stockholders in due course.”
“The actions announced today will allow the Company and Engaged Capital
to continue our constructive working relationship while avoiding the
expense and disruption of another proxy contest as we continue exploring
options to maximize value for all of our stockholders,” said J.V.
Lentell, Chairman of the Rent-A-Center Board of Directors. “Under the
terms of the cooperation agreement, the Board will achieve improved
diversity while also implementing other important corporate governance
Glenn W. Welling, Founder and Chief Investment Officer at Engaged
Capital, stated “We are pleased to reach a cooperation agreement with
Rent-A-Center. With the nominating window for the 2018 Annual Meeting
upon us, this agreement helps ensure that the Board’s review of
strategic and financial alternatives will continue unabated and without
distraction – enabling Rent-A-Center’s directors to continue working
constructively to maximize value for all stockholders.”
Pursuant to the cooperation agreement, Engaged Capital has agreed to
certain standstill provisions. Engaged Capital has also agreed to vote
all of its shares in favor of Rent-A-Center’s previously announced
proposal to declassify the Board which, if approved, will result in all
directors standing for election on an annual basis.
Rent-A-Center’s Board nominees, its Board declassification plan and
other matters to be considered by the Company’s stockholders will be
detailed in the Company’s 2018 definitive proxy materials, which will be
filed in advance of the 2018 Annual Meeting. This press release is being
provided for informational purposes only and does not constitute the
solicitation of any vote for approval of any transaction or proposal.
The full cooperation agreement between Rent-A-Center and Engaged Capital
will be filed on a Form 8-K with the Securities and Exchange Commission.
J.P. Morgan is serving as financial advisor and Winston & Strawn LLP is
serving as legal advisor to Rent-A-Center.
A rent-to-own industry leader, Plano, Texas-based, Rent-A-Center, Inc.,
is focused on improving the quality of life for its customers by
providing them the opportunity to obtain ownership of high-quality,
durable products such as consumer electronics, appliances, computers,
furniture and accessories, under flexible rental purchase agreements
with no long-term obligation. The Company owns and operates stores in
the United States, Mexico, Canada and Puerto Rico, and Acceptance NOW
kiosk locations in the United States and Puerto Rico. Rent-A-Center
Franchising International, Inc., a wholly owned subsidiary of the
Company, is a national franchiser of rent-to-own stores operating under
the trade names of “Rent-A-Center,” “ColorTyme,” and “RimTyme.” For
additional information about the Company, please visit our website at www.rentacenter.com.
About Engaged Capital
Engaged Capital, LLC (“Engaged Capital”) was established in 2012 by a
group of professionals with significant experience in activist investing
in North America and was seeded by Grosvenor Capital Management, L.P.,
one of the oldest and largest global alternative investment managers.
Engaged Capital is a limited liability company owned by its principals
and formed to create long-term shareholder value by bringing an owner’s
perspective to the managements and boards of undervalued public
companies. Engaged Capital’s efforts and resources are dedicated to a
single investment style, “Constructive Activism” with a focus on
delivering superior, long-term, risk-adjusted returns for investors.
Engaged Capital is based in Newport Beach, California.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180205005685/en/
Source: Rent-A-Center, Inc.
Interim Chief Financial Officer
Frank, Wilkinson Brimmer Katcher
James Golden / Matthew Gross /